White
Paper
September 2012
AFFORDING CITIZENSHIP
AND SECURING A SOUND
FINANCIAL FUTURE
Introduction
U.S. citizenship is a crucial step toward improving the social, civic, and economic well-being of
new Americans and their children. Promoting citizenship among immigrants is also important
to advancing the overall integration and social cohesion of our nation. Furthermore, citizenship
is an increasingly necessary precondition for financial stability and economic mobility for
immigrant families.*
While our country aspires to fully integrate immigrants into U.S. society, barriers on the path to
naturalization threaten this goal by placing citizenship out of reach for many eligible immigrants.
One of the major obstacles to naturalizing that many immigrants face is the financial cost. The high
fees can make naturalization prohibitive to many, while also providing fertile ground for financial
predators to take advantage of immigrants’ needs for cash to cover these expenses. High-cost
lending to low-income immigrants is a well-documented problem that can threaten families’
economic stability.
Previous NCLR reports have discussed the need to examine the U.S. Citizenship and Immigration
Services (USCIS) agency’s naturalization application fee structure and costs. This paper previews
new data on the demand for solutions to the cost barriers to citizenship and early observations from
a burgeoning social enterprise sector striving to meet this demand. The report concludes with key
considerations for scaling innovative models that facilitate citizenship and promote financial security.
Economic Hurdles to Citizenship
The journey to citizenship consists of a $680 application fee and can include costs associated with
other supportive services such as English and citizenship preparation classes and legal assistance.
The application cost alone increased 610% between 1998 and 2008. Following the most recent fee
hike in 2007, the number of applications for citizenship fell sharply from 1.4 million applicants that
year to 526,000 in 2008.1 Furthermore, while reforms to the nation’s broken immigration system will
present new opportunities for immigrant families to access citizenship, these efforts at the same time
often impose new financial barriers to achieving that dream. For example, the Deferred Action for
Childhood Arrivals policy† announced by President Obama will require students to pay a processing
fee of $465 to obtain their work permit.
* This white paper was authored in September 2012 by Janis Bowdler, Director of the Wealth-Building Policy Project,
Lindsay Daniels, Associate Director of Housing and Wealth-Building Initiatives, and Marisabel Torres, Policy Analyst for the
Wealth-Building Policy Project of the National Council of La Raza’s (NCLR) Office of Research, Advocacy, and Legislation.
NCLR is the largest national Hispanic civil rights and advocacy organization in the United States. The production of this
white paper was made possible by funding from the John S. and James L. Knight Foundation.
† On June 15, 2012, the Secretary of Homeland Security announced that certain people who came to the U.S. as children and
meet several key guidelines may request consideration for deferred action on their immigration status for a period of two
years, subject to renewal, and would be eligible for work authorization during that time. Individuals who can demonstrate
through verifiable documentation that they meet these guidelines will be considered for deferred action.
www.nclr.org
Immigration advocates estimate that an average
immigrant earning the federal minimum wage
would have to save eight weeks of full-time
earnings to pay the citizenship fees for a family
of four, yet in the current economic climate,
there is little evidence to suggest that families
have that much left over after paying for
household necessities.2 Record unemployment
and foreclosure rates have wiped out savings
reserves, knocked families out of the banking
system, and devastated credit scores. The
economic gains associated with higher incomes
in the late 1990s and 2000s have been eroded,
and recovery and advancement will likely be
incremental and challenging for those affected
by the recession, especially immigrants. While
national attitudes have shifted in favor of
prioritizing household savings, many families
are not well positioned to save enough to
cover unexpected emergencies or seize new
opportunities. Families living paycheck to
paycheck require financial tools to preserve
as much of their income as possible and avoid
financial pitfalls. Those that live outside the
mainstream banking system spend as much
as $1,000 annually on financial transaction
services such as check cashing and bill pay
services.3 Households trying to make up gaps
in income spend untold sums on predatory
payday loans or rack up costly credit card
bills. Such economic constraints are widely
felt among low-income, unemployed, and
elderly households. However, these issues are
especially acute for noncitizen families.
2
September 2012
White Paper
Financial Capability of Immigrants
New research from NCLR suggests that
immigrant families—who are disproportionately
un- and underbanked compared to U.S. citizen
households—face additional difficulties in
accessing essential financial tools and services,
and that too few banks have the linguistic or
cultural skills to meet their needs. The lack of
access to financial products and information not
only threatens the long-term financial stability
of non-U.S. citizens, it puts citizenship out of
reach for many.
Holding an account at a federally-insured
bank or credit union is widely regarded as a
primary step in achieving financial stability.
For immigrants, it has also become an issue of
physical safety as workers known or suspected
of holding large sums of cash have become
targets for criminals. NCLR surveyed over
1,000 Latinos at NCLR Affiliates and Progreso
Financiero sites in California to learn more
about how they meet their daily and longterm financial needs.4 In line with the national
profile of non-U.S. citizens, noncitizen survey
participants were overwhelmingly low-income
and lacked a checking or savings account at
a bank or credit union.* Non-U.S. citizens
represented the majority of the unbanked
in the survey results, making up 60% of
participants who reported they did not have
a basic bank account. Noncitizen survey
participants were predominately Spanishspeakers and a majority was female.
The survey findings suggest that the costs
associated with citizenship present a true
challenge for many immigrants, and they reveal
three insights into the demand for access to
affordable financial services for daily use and
when seeking citizenship:
• More than half of eligible noncitizens report unaffordability as a primary reason for not pursuing naturalization. Although eligibility was a factor for some
non-U.S. citizens surveyed, over half
*Seventy percent of non-U.S. citizens in the survey reported annual earnings of less than $30,000. The 2009 FDIC
Survey of Unbanked and Underbanked Households showed that households with earnings below $30,000 account
for at least 71% of unbanked households, and households with a householder who is a noncitizen are more likely
to be unbanked.
(51%) of those who were eligible for
citizenship reported cost as the reason
they were not yet U.S. citizens.
• Noncitizens do not have the financial
security necessary to deal with financial emergencies or opportunities to pursue citizenship, and most do not see traditional
depositories as having a solution.
Noncitizens surveyed overwhelmingly lacked access to traditional forms of credit
(47%), were unlikely to have a bank account
(38%), and were likely to have experienced
unemployment in the last year (13.4%).
Nearly a third reported income insufficient
to save after paying household bills
(31%). Furthermore, the survey data show
that regardless of citizenship status, most
participants would turn to a friend or family
member for emergency funds if they needed
them, as opposed to drawing from savings
or tapping credit. If family were unable to
provide the money, most did not know where they would turn next. Notably, most
were either unaware of potential resources
at a local bank or credit union or did not
believe the financial institution could meet
their need.
In sum, personal savings and access to
reasonably-priced credit are two critical
components of any household budget. For
families working to stretch their dollar,
savings and credit become even more
important. They need tools and resources
that promote savings and avoid excessive
debt that will inhibit future financial
opportunities. Moreover, families need
objective advice and information to make
the complex financial decisions that will put them on track to save for citizenship.
3
Lessons from the Field
In identifying specific strategies that can put
citizenship in financial reach for immigrant
families, NCLR sees several promising models
emerging from its field-based network of
community organizations. Since 2007, the
ya es hora ¡CIUDADANIA! campaign, begun
through a partnership by the National
Association of Latino Elected and Appointed
Officials Educational Fund and Univision, has
worked with a national network of communitybased organizations that provide pro bono
assistance with the naturalization application.
Recently, many of those community groups
are adding a financial access component to the
application assistance that can help eligible
Legal Permanent Residents (LPRs) overcome the
affordability obstacles of naturalization, while
also helping families address their financial
Both comments were originally written in Spanish and have been translated by NCLR.
White Paper
*
their White peers to be unbanked and lack
access to key financial resources. However,
becoming a citizen presents new
opportunities to engage the financial system
in constructive and helpful ways. For
example, the restrictive identification
requirements of some banks, which are
easier for citizens to meet, may make credit
available on more favorable terms. When
asked what banks could do to attract their
business, one survey respondent stated, “I’d
want to open an account more easily with
only one ID.” Another commented on the
burden of ID requirements: “To open an
account they ask for so many things, like
your social security number.”*
September 2012
• Citizenship is a household asset. Individuals
surveyed who had obtained citizenship
were much more likely to have basic
financial accounts, earn higher incomes,
and put away savings, even when compared
to documented immigrants who had not
yet naturalized. This difference is highlighted
in rates of the unbanked for naturalized and
non-naturalized immigrants. Naturalized
survey participants had an unbanked rate of 10%, compared to documented but non-naturalized immigrants, who had
an unbanked rate of 34%. This data suggests
that the differences in banking experiences
and capability among immigrants cannot be
attributed to legal or documentation status
alone, and that the step from permanent
residency to citizenship opens up additional
important doors for immigrants. Of course,
citizens also face economic challenges.
Hispanic families are still more likely than goals. Other social entrepreneurs are also
putting forward promising models, such as
the San Francisco–based Mission Asset Fund,
where the Lending Circles Program blends
social lending and Individual Development
Account matches, and the Latino Community
Credit Union in Durham, North Carolina, which
recently announced affordable microloans for
students submitting applications under the
Deferred Action program.
September 2012
White Paper
4
In this section, NCLR shares early learnings
from one model which is currently being tested
in the field. The New American Loan Fund, a
project of CASA de Maryland, an NCLR Affiliate,
seeks to increase the rate of naturalization
among LPRs in Maryland through a small-dollar
loan program that helps immigrants pay for
their citizenship application. With support
from Citibank, Raza Development Fund, NCLR,
and others, CASA is partnering with two local
Community Development Financial Institutions
(CDFIs) to administer the microloans. The
CDFI partners underwriting the loans, the
Latino Economic Development Center and the
Ethiopian Community Development Council’s
Enterprise Development Group, have closed on
60 loans for the $680 naturalization application
fee at 18% APR repaid over six months,
which averages out to six $120 payments per
participant. These payments are reported
to the credit bureaus, aiding the borrowers
in their effort to build a solid credit history
before becoming citizens. Participants also
meet with a financial coach while repaying
their loan. Their coach recommends financial
education classes, helps to open a bank
account if the participant does not have one,
provides guidance on the household budget,
and checks in on the participant’s progress
toward naturalization. NCLR commissioned an
evaluation of the program from the University
of North Carolina’s Center for Community
Capital, which is designed to provide proof-ofconcept level information about the impacts
of the program on participants’ attitudes
about saving, credit, and money management.
The evaluation consists of an online survey,
administered first when a participant enrolls in
the program and again three months later, and
a series of interviews with LPRs who worked
with CASA on their citizenship application and
loan. The results are intended to highlight
critical program elements necessary to take the
project to scale. Early insights include:
• Without access to this unique loan, CASA
clients indicate that they would not have
had the financial resources to complete
the citizenship process. One participant noted, “My friend…told me about CASA
de Maryland…he told me, ‘Call them, it’s a
support, CASA de Maryland will help you’…
Thanks to them and God, I got the loan
approved. We are elderly people, but
thank God we were able to become citizens
of this country…It was the best thing that
has happened to me in these last two years.
Since a long time ago I wanted to [become
a citizen], but sometimes [it’s] the lack of
money.” Another participant affirmed,
“I couldn’t raise the $680. [CASA] lent me
the money, and thanks to you I became
a citizen.”
• Advice and guidance regarding financial
topics and the naturalization process are a
critical combination when extending credit
to finance citizenship. In addition to a loan
to cover the cost of the application, CASA
provides holistic services that prepare
eligible LPRs for the naturalization process
and for financial integration into U.S.
society. Program participants receive help
in completing the citizenship application—a
process that typically costs several thousand
dollars in legal fees—and preparation for
the exam, plus follow-up throughout the
application process, which currently takes
four or five months in the USCIS’s Northeast
Region. Alongside citizenship services,
applicants participate in one-on-one
financial coaching that promotes family
financial stability and positive financial
behaviors. This service helps to ensure
that families receiving a credit product
have a robust understanding of how the loan
works and a resource to turn to if repayment
becomes a challenge.
• Loans are being repaid on time and in
full. All of the survey participants are on
time with their loan payments; in fact,
100% of the 40 loans that have closed have
on-time repayment. Because these
payments are being reported to the credit
bureaus, participants will start their
citizenship journey on more solid financial
ground with newly-established or improved
credit. The evaluation will continue until
the target goal of 100 participants are enrolled in the program and have completed
the surveys.
Considerations for Scaling Innovation
An estimated 8.5 million immigrants are eligible
for citizenship5 but have not taken all the
steps necessary to naturalize. In addition, the
Obama Administration’s Deferred Action for
Childhood Arrivals program is anticipated to
serve 1.7 million young adults and students.
Many of these families are unable to take
advantage of the opportunities that citizenship
provides—or temporary work eligibility in the
case of Deferred Action students—because they
cannot afford the associated fees. Moreover,
with an estimated 11 million undocumented
individuals living in the U.S., future demand
for affordable solutions to citizenship promises
to be enormous. Leaving this need unmet is
likely to result in high-cost or predatory lenders
targeting immigrants, particularly given the
potential volume bursting into the market
should a pathway to legal status be approved
by Congress.
• Promote personal savings and positive
financial behaviors. The low savings rate
among immigrants is offset by their thirst
for reliable financial information and advice.
Nonprofit financial coaches facilitate this
process by providing families with objective
advice and guidance while they are making
key budget decisions and also help families
of modest means save for future goals
through programs such as matched savings,
peer lending circles, Individual Development
Accounts, and tax-time savings initiatives.
By padding their personal savings, families
better position themselves to obtain credit
on reasonable terms—if credit is needed
at all—and reduce reliance on expensive and risky credit such as payday loans when emergencies come up. A national program to reduce the financial burden of citizenship should include both a household savings strategy as well as access to credit.
5
White Paper
• Leverage mission-driven entities to
provide the capital needed for responsible
microloans. Small-dollar lending can be
difficult to offer at costs that are affordable to the user and profitable to the lender.
Moreover, small-dollar users—immigrants,
in this case—are often highly exploitable, and thus great care must be taken to ensure
that citizenship application loans do not
become an invitation for predatory
lending. To achieve the goal of offering
loans on affordable and responsible terms,
policymakers should look to missiondriven financial institutions such as CDFIs
and Community Development Credit Unions
(CDCUs). Assuming that half of eligible
LPRs and Deferred Action youth require
a loan to cover their application fees, the
market for related microloans could easily
exceed $1 billion. At scale, CDFIs and CDCUs
could offer credit at an affordable cost.
USCIS should explore ways to partner with
these institutions to advance microloans
to cover citizenship fees. Lawmakers should
consider appropriating funds for this
purpose as a component of future
comprehensive immigration reform
proposals. Finally, private financial
institutions should see this as a potential
market and explore ways to deliver
affordable capital through CDFIs and CDCUs
or responsibly-priced credit directly through
their branches.
September 2012
Based on new data from low-income immigrants
surveyed in California and the early lessons
gleaned from pioneers in this field, NCLR
offers the following considerations for scaling
innovative solutions to citizenship affordability:
• Seize opportunities to collaborate and capture a powerful teachable moment.
Low-cost naturalization assistance and
financial access programs exist in
communities but have only recently begun to find each other on the ground.
By busting the silos between the two fields,
a powerful “teachable moment” is created:
that is, families that are motivated to find
an affordable solution to completing the
citizenship process become a captive
audience for relevant financial information
that can shape and enhance their decisions
as banking consumers. The purpose of
a naturalization assistance program is to
facilitate citizenship; therefore, lack of
financial education should be addressed so it
does not become a barrier. However,
research has shown that financial
information is best received and digested
when it is delivered at or near the time a
decision is being made. Similarly, navigating
the naturalization process can be confusing.
A program intended to eliminate cost
barriers to citizenship must incorporate
advice on the application process so that
resources—whether from personal savings
or a loan—are applied as intended. Few
institutions will have the necessary expertise
in both financial and immigration issues, so
strong partnerships will be required to
support a sustainable program. Moreover,
with a market potential in excess of
$1 billion, capital is not likely to come
from a single source. Partnerships between
nonprofit, private, public, and philanthropic
institutions must be fostered in order to
meet the demand.
September 2012
White Paper
6
Endnotes
1
U.S. Department of Homeland Security, “Table
20: Petitions for Naturalization Filed, Persons
Naturalized, and Petitions for Naturalization
Denied: Fiscal Years 1907 to 2008,” 2008 Yearbook
of Immigration Statistics, http://www.dhs.gov/
yearbook-immigration-statistics-2008-0 (accessed
September 2012).
7
2
Flavia Jimenez, Priced Out: U.S. Citizenship, A
Privilege for the Rich and Well Educated? (Chicago,
IL: Illinois Coalition for Immigrant and Refugee
Rights, 2008), http://icirr.org/sites/default/files/
Priced-Out.pdf (accessed August 28, 2012).
3
Matt Fellowes and Mia Mabanta, Banking
on Wealth: America’s New Retail Banking
Infrastructure and Its Wealth-Building Potential
(Washington, DC: Brookings, 2008).
4
Full survey results will be available in the Fall of
2012 at www.nclr.org.
5
Nancy Rytina, “Estimates of the Legal Permanent
Resident Population in 2011,” Population
Estimates, July 2012. Office of Immigration
Statistics, U.S. Department of Homeland Security.
Washington, DC, 2012, http://www.dhs.gov/
xlibrary/assets/statistics/publications/ois_lpr_
pe_2011.pdf (accessed August 28, 2012).
White Paper
September 2012